Importance of Environmental Audit in Companies?

Answer 1

There are two basic types of "environmental audits" discussed below. Furthermore, many companies combine environmental audits with health and safety audits. These combined audits are known as EHS or HSE audits. The same two basic audit types apply to EHS audits. In most situations in the United States, environmental/EHS audit programs are voluntary programs companies choose to implement as a critical part of managing and monitoring their regulatory compliance and legal risks. Compliance Auditing. This type of audit compares the operations to the legal requirements to which it is subject. Auditors gather information through visual observations at the site, document reviews and interviews of staff. This data is then compared to the applicable permits, regulations, ordinances, enforcement agreements, etc to evaluate how well the operation is conforming to those applicable legal requirements. The importance of compliance auditing is clear - to assist the site and management in identifying legal risks to be corrected. In the absence of audits, companies generally have no structured review or oversight of environmental compliance activities. Compliance audits are frequently required by enforcement settlements with state environmental regulatory agencies, the EPA or Department of Justice. In these cases, conducting the audits themselves is a legal requirement. Many times, the corporate environmental audit function provides additional services to the sites such as notifying sites of new regulatory requirements, communicating trends in findings to help sites correct issues that may be systematic, development of audit finding corrective action plans and monitoring completion of corrective actions such that closure is obtained in a timely manner. Corporate audit teams may also be comprised of environmental staff from other divisions/locations within the company. These "borrowed" team members often praise their temporary audit assignments as the best environmental training they receive. Clearly, the additional value and importance of this training is in the implementation of the new information back at the borrowed auditor's home location. Environmental compliance audit information frequently rolls up into senior management reports and initiatives. Environmental compliance information is many times included in the Management Discussion and Analysis section of Annual Reports published for publicly traded companies in the US. Companies that publish stand-alone environmental/sustainability reports also include a summary of environmental compliance audit information to communicate audit activities and results to the stakeholders. Environmental compliance information from audits is also used in the context of Sarbanes-Oxley, Enterprise Risk Management and Internal Audit programs. An interesting paradox in environmental/EHS compliance audit programs comes with success of the audit programs. The goal of the program is to reduce risks, with an ultimate goal of having no audit findings. However, in instances where no audit findings are discovered over a period of time, management frequently calls into question the value of EHS audit programs and expenses. In these cases, companies may choose to implement a metric that demonstrates the economic value of EHS risk reductions, such as Return on Investment of Loss Avoidance (ROIaTM) Management Systems Auditing. In contrast to compliance auditing, environmental/EHS management systems (EMS) audits generally do not delve into the details of the legal requirements to which the site/company is subject. Rather, these audits evaluate management framework that exists to support the site’s/company’s ability to address compliance and risks. Key elements of management systems include − Management commitment − Operating procedures − Training programs − Document management The details of EMS structure/components will not be discussed here and the above is just a partial listing of the standard management system elements. Auditing the EMS is intended to ensure that operations have in place all the tools for self-reliance relative to compliance. In the mid 1990s during the development of the inaugural version of ISO 14001 (the environmental management system standard), it was widely held that EMS auditing would replace the need for compliance audits. In the United States, however, this idea did not prove out given the regulatory enforcement and legal frameworks, combined with the litigious nature of our culture. Indeed, many auditors attest to significant compliance matters being found at sites with high marks on EMS audits. The impression is that while sites prepare for management systems audits (such as ISO 14001 certification), their efforts focus on the document management and training elements of the standard; they become distracted from their day-to-day compliance management activities. Today, with a decade and a half of ISO experience in the rear view mirror, most environmental/EHS auditing professionals agree that a balance between systems and compliance audits provides the best results. The importance of management systems and related audits may relate to customer requirements. Vendor/supplier selection criteria may include EMS certification (such as ISO 14001). The mid 1990s saw the automotive industry implement supplier standards that included ISO 14001 certification. At the time, that was thought to be a tipping point for EMS certification with the expectation that ISO 14001 certification would soon be a minimum requirement across all industries. However, that has not occurred. While companies developed EMS programs that conform to the ISO 14001 standard, many have not sought certification as they have not seen an economic driver to do so (and the cost – both direct and indirect – can be significant). Finally, EMS audits can be an important part of corporate sustainability or governance programs. At the current time, other forms of environmental audits are becoming popular. Some of these include industry-specific “green certifications” (such as in the forest products industry), supply chain greening reviews/assessments/audits, and energy use audits.